Q: How can investors bet on a rally in Japanese stocks other than buying individual stocks?

A: Japanese stocks are rising and starting to shake off their long malaise.

The Nikkei 225 average shot up 23% in 2012, topping even the healthy 13.4% gain by the Standard & Poor's 500 index.

Investors who had the courage to buy into Japanese stocks in early 2009 have done even better, with the Nikkei more than doubling from that point.

But when investing in Japan, as is the case in the U.S., choosing the right stocks is very important. For instance, investors in shares of Sony are down by 40%, as the electronics company is playing catch-up in the smartphone market.

A better bet for investors trying to get exposure to a recovery of Japan, instead of choosing individual stocks, would be the variety of Japan and Asia focused exchange-traded funds.

The iShares MSCI Japan Index ETF owns more than 300 Japanese stocks, including giants such as Toyota, Mitsubishi Financial and Honda.

Another option is a broader ETF such as Vanguard's MSCI Pacific ETF. More than half the ETF is made up of Japanese stocks, but it also has 27% in Australia and 9% in Hong Kong.